I am thoroughly stunned at the complete lack of mention about the Fannie Mae and Freddie Mac bailout in the Herald these past two days. The consequences of the bailout are enormous for people in the business world as well as for regular taxpayers and people who are struggling with their mortgages. Of course, it is very interesting to know every detail about which candidate or former candidate stopped in what town this week, but what do you think these candidates will be fielding questions about in their upcoming stops? The left and the right have two very differing opinions on what should be done with the restructuring of these two mortgage giants (who owned over 50 percent of those subprime loans we have been hearing so much about), and whichever candidate wins in November will no doubt play a big role in deciding whether the two companies are returned to what they were before the bailout (the conventional view of the left) or whether the

companies will be made “smaller and smarter” (Sarah Palin’s view). The former executives of these companies stand to gain combined severance packages of around $24 million, and the companies themselves could possibly receive huge tax breaks from the IRS in order to support the bailout. I know there are enough anti-big-business people in this city to think that some would at least appreciate the details of the bailout.

And last, but certainly not least, what about the “moral hazard” that many, including Alan Greenspan, have warned about since the bailout of the hedge fund Long-Term Capital in 1998 and through the bailout of Bear Stearns earlier this year? If the government continues to bail out these giant corporations many view to be too large to fail, there will be no incentive for these companies to manage their downside risk. The bailout safety net could tempt other companies to take excessive risk. This is an issue that will play a significant role as major American automakers Ford, GM and Chrysler lobby for government loans to finance the continued development of fuel-efficient vehicles. Because the failures in Detroit won’t be a big issue for the candidates in the run to November, right?

I am sincerely disappointed in the Herald for somehow managing to consider this story non-existent.

Taylor Paul

Senior, accounting

[email protected]